Fed survey finds US growth, hiring mostly steady
Wednesday, June 6, 2012
WASHINGTON (AP) — The U.S. economy grew moderately in most regions of the country this spring and companies kept hiring, according to a Federal Reserve survey released Wednesday.
The mostly upbeat survey offered a hopeful sign after last week’s more dismal data on hiring and manufacturing. Those reports sketched a picture of an economy that is slumping after a promising winter.
The positive survey, which is anecdotal, also makes it less likely that Fed policymakers will take further action in the coming months to lift the economy. The survey doesn’t suggest the economy is in dire need of help, many economists said.
“This report was more upbeat than probably anyone expected,” said Jennifer Lee, an economist at BMO Capital Markets. That suggests that “some of the soft reports on payrolls, auto sales, and manufacturing may be temporary.”
The Fed survey shows growth in each of its 12 bank districts from April 3 through May 25. Growth picked up in 10 districts. It was steady in the Boston district, which includes all of New England, and slowed in the Philadelphia region, which includes Delaware, New Jersey and parts of Pennsylvania.
Hiring was steady or rose modestly, according to the Fed’s report, known as the “Beige Book.” That’s in stark contrast to the government’s jobs report last week, which said U.S. employers added just 69,000 jobs in May, the fewest in a year. Since averaging 252,000 a month from December through February, job growth has slowed to a lackluster average of 96,000 a month from March through May.
“We are encouraged by the overall tone ... because it suggests that business contacts are not experiencing a sharp drop-off in activity amid the heightened economic uncertainty of late,” Joseph LaVorgna, an economist at Deutsche Bank, said in a note to clients.
Fed Chairman Ben Bernanke is expected to update his views on the economy and the Fed’s policies during a congressional hearing today.
It was the second positive reading on the economy this week. On Tuesday, a private survey found that the service sector expanded at a slightly faster pace than the previous month. The industries surveyed cover about 90 percent of the economy and include health care, retail, construction and financial services.
The Beige Book survey was mostly positive. Manufacturing and home sales improved in most districts, as did residential and commercial construction. Auto sales were strong in most areas. And businesses sought more loans, which could signal expansion plans. Small and medium-sized banks in the New York district reported the most broad-based increase in loan demand since the mid-1990s.
But the survey also pointed to some weakness in the economy. Consumer spending was flat or increased only slightly in almost all districts. That could restrain growth because consumer spending drives 70 percent of economic activity.
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